*Strata Reform

NSW Fair Trading has advised its intentions to postpone the commencement of the building defect rectification and bond scheme from 1 July 2017 to 1...

NSW Fair Trading has advised its intentions to postpone the commencement of the building defect rectification and bond scheme from 1 July 2017 to 1 January 2018.

The postponement of the building defect bond scheme appears to be due to the delay in preparation of the new national standard which will form part of the defect inspection report under the scheme. We expect that formal notice of the postponement will be issued by the NSW Parliament in the coming weeks.

To summarise, developers will have new obligations with respect to residential building work of more than 3 levels and containing two or more separate dwellings in NSW. The Act requires developers to comply with a number of conditions concerning the payment of a bond and the rectification of defective building works. The following are key stages concerning how the scheme will work:

Preparing to lodge the building bond

developers will be required to lodge a bond with NSW Fair Trading equal to 2 per cent of the contract price for residential and mixed use high rise strata buildings. The ‘contract price’ is the total price paid under all applicable contracts for the building work as at the date of issue of the occupation certificate. The bond must be submitted at anytime before the occupation certificate is issued. It is important to know that the occupation certificate can not be issued before the 2 per cent bond is submitted.
The building bond can be claimed 2 years after the date of the building completion or within 60 days of the final report provided to the secretary of the building.

Appointing a building inspector

developers must appoint a qualified independent building inspector to inspect and report on the building defects. The building inspector must be appointed within 12 months of completion of the building work.

Interim inspection and report

The building inspector is required to prepare an interim report identifying defective building work between 15 and 18 months after completion of the building work. As this period falls outside the traditional legislated 12 month defect liability period, developers will need to factor this into building contracts entered into after the commencement of the Act.

Final inspection and report

The building inspector must conduct a final inspection report between 21 and 24 months after completion of the building work. If any defects specified in the interim building report are not rectified by the developer prior to the final report, the owners corporation can claim the building bond to rectify the defects. A final report is not required if the interim report was prepared by a building inspector appointed by the secretary and the report did not identify any defective issues. The secretary may, on application by a developer, determine that the developer is not required to arrange a final report if the interim report did not identify any defective building work and the secretary deems it appropriate to make such determination.

Release of defect and building bond

If no defects are identified, the bond will be released in full to the developer. If building defects are identified, the owners corporation can claim the bond in full or in part or the developer can agree to release part or all of the bond to the owners corporation.

Completing the process

The department of Fair Trading will facilitate the release of the defect and building bond. The owners corporation must use the bond to fix any defects identified. After the defects are rectified, the owners corporation must repay the balance of the bond to the developer.

Whilst elements of the new legislation changes are complex, Bright & Duggan has made significant changes and invested heavily to adapt to these reforms to guide developers and owners corporations through these adjustments.

Should you want a personalised in-house presentation on the impacts of the new laws and how to best prepare, please contact our specialist development team at shedges@bright-duggan.com.au or call 02 9902 7163

The NSW Government has deferred the introduction of the Fire and Emergency Services Levy (FESL). This has been done to ensure property owners,...

The NSW Government has deferred the introduction of the Fire and Emergency Services Levy (FESL). This has been done to ensure property owners, especially small to medium businesses, do not face an unreasonable burden in their contribution to the State’s fire and emergency services.

In the majority of cases across NSW, fully insured people would be better off under the new system. However it had become clear that some fully insured businesses were facing unintended consequences. The Government has taken into account the concerns of the community and will take the time to establish this reform right.

The NSW government will be releasing an options paper for it's proposed regulatory framework for Airbnb and other short term holiday accommodation....

The NSW government will be releasing an options paper for it's proposed regulatory framework for Airbnb and other short term holiday accommodation. The paper will address planning and strata management issues including the impact on residents and relevant stakeholders.

The NSW government has given "qualified support" to 9 of the 12 recommendations and full support to three.

Speak to your strata team to discuss the potential impacts on your property.

The nbn™ network will soon replace most existing fixed phone and internet networks. This switch will affect the operation of important services...

The nbn™ network will soon replace most existing fixed phone and internet networks. This switch will affect the operation of important services such as your premises monitored fire alarm and lift emergency phone.

The Fire and Lift Register is an important government initiative to help support the safe migration of monitored fire alarms and lift emergency phones from most existing networks.

Speak to your strata team about registering your building to streamline your installation process

An increasing number of children have been admitted into hospital as a result from falling from windows. In response, the NSW government launched...

An increasing number of children have been admitted into hospital as a result from falling from windows. In response, the NSW government launched the “kids don’t fly campaign” and a change in legislation requiring window safety locks to be installed by 13th March 2018.

Residents will still be able to open their windows but will have the security of knowing that children will be safe when the window is open. Speak to your strata team to ensure your building is compliant.